We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Markets cautious ahead of Fed minutes

Equity indices are still in retreat, as markets take their usual cautious approach to events ahead of Federal Reserve minutes and the start of earnings season tonight.

share

anonymous

2014-10-08T16:21:00+0100

Source: Bloomberg

Tesco share price bounces back

Day three of the global growth scare sees indices struggling to hold their ground. Bonds have become the destination of choice once again as the equity bull market faces its most serious test in months. The danger is now that a hawkish set of Federal Reserve minutes, pointing to an earlier hike in rates, could easily put markets into a tailspin from which they could struggle to recover.

It’s a testament to how far Tesco has fallen that its three-day rise is being talked about in such glowing terms. Ultimately however, the share price is simply seeing a bounceback from the heavy beating witnessed in recent weeks. Memories of the profit warning are still fresh however, so we can expect the bearish sentiment to take hold again if the upcoming set of figures fails to live up to (admittedly low) expectations.

Positive outlook on Alcoa earnings

US indices are in no mood to rally this afternoon, as they push back to the lows seen last week. It is almost as if the job numbers last Friday didn’t happen, and job recovery or not if minutes this evening adopt a more hawkish tone then the way to further downside will be opened.

At least Alcoa’s earnings could provide reason for a positive frame of mind but at around 22 times earnings, the shares do not leave much room for negative surprises. Earnings season needs to step up and rescue equity markets, since all else seems to point to reasons for further selling.

Gold halted before $1220

It must be disappointing being an advocate of higher gold prices, given that each rally still seems to be used as an excuse to short the commodity once more. This morning’s push in the direction of $1220 has come to a juddering halt, with the price now sitting close to the lows of the day.

If Federal Open Market Committee minutes this evening tread, as has been the trend, towards the hawkish end of things then a retest of the Monday lows close to $1180 is eminently possible. There is still no respite for oil prices, which remain on course to breach multi-year lows barring any game-changing decision from OPEC.

USD/JPY no longer overbought

After two days of losses dollar bulls seem to have regained the upper hand in USD/JPY, defending the ¥108 level as if their lives depend on it. Having seen the currency pair work off its overbought condition over the past 48 hours, it now looks as if we could be about to witness the next move higher for the dollar, pushing through the October highs as the divergence between central bank policy in the US and Japan becomes ever more stark.

Share this article

share

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

CFDS are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

The information on this site is not directed at residents of the United States and Belgium, or any particular country outside Switzerland and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.